NSI Acquisition to Give Verisign Domain-Naming

SAN MATEO (03/10/2000) - VeriSign Inc. announced an agreement last week to acquire Internet domain-name registrar Network Solutions Inc. (NSI) in a $21 billion stock deal. The aim of the deal is to streamline the process of establishing an e-commerce presence for Verisign customers by allowing them to purchase Verisign's authentication, security, and trust services, while simultaneously registering their domain names, said Anile Pereira, vice president of the Internet Services Group at Verisign.

"We look at marrying the two infrastructures, creating a one-stop shop for identity and e-commerce services," Pereira said.

The acquisition is expected to close in the third quarter of this year.

This deal is unusual because it centers on providing more effective business processes instead of new technology, said Abner Germanow, research manager of the Internet Security Program at International Data Corp., in Framingham, Mass.

"When you combine issuing names with proving that the name is indeed a valid name, then the combination makes sense," Germanow said. "There have been cases of people stealing domain names. Part of what you may see here is ... an ability to ensure that those sorts of mistakes don't happen."

From 1992 to 1999, NSI held exclusive rights to assign domain names ending in.com, .net, and.org, but last year the U.S. Department of Commerce allowed new competitors into this field. However, NSI kept control rights of the Internet name registry, which contains every address on the Internet.

From 1997 until this year, NSI was also the subject of a U.S. Department of Justice antitrust investigation, but that was dropped last month with no action taken against the company. However, with this investigation in mind, one analyst warned that Verisign should keep its registration business separate from its other products.

"I think there will be a lot of scrutiny as [Verisign] begins to operate that it won't be anti-competitive," said John Pescatore, research director at the Gartner Group, in Stamford, Conn., adding that it will raise the question of whether Verisign is "putting impediments in the way of [certificate] consumers having a choice."

Verisign Inc., in Mountain View, Calif., is at www.verisign.com. Network Solutions Inc., in Herndon, Va., is at www.networksolutions.com.

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